Egypt has signed a cooperation agreement worth 174 MM USD loans with Germany. Egypt will pay 2% interest rate over 30 years.

Insights MENA

Economic Outlook

Egypt has signed a cooperation agreement worth 174 MM USD loans with Germany. Egypt will pay 2% interest rate over 30 years. The loan will be used to finance sectors of renewable energy, climate change, environment, SMEs, and vocational training which is expected to create more job opportunities in the country.

As an attempt to decrease the cost of borrowing, Iraq's Minister of Finance is anticipating the sale of 2 BN USD Eurobonds in Q4-2016, this was a result of the drop in oil prices and the reduction in its revenue which represents 95% of government income. Accordingly, the government sought international support and 600 MM USD are expected to be financed by the International Monetary Fund.

Agriculture sector in Jordan witnessed a 24% decrease in exports of fruits and vegetables in the first four months in 2016, as a result of the shutdown of the biggest Jordanian markets namely Syria and Iraq which consumed around two-third of Jordan's vegetable produce. Jordan's Agriculture Ministry is attempting to solve the congestion in Jordanian markets though facilitating selling fruits and vegetables to Russia.

The annual Urban Consumer Price Inflation in Egypt increased in May to 12.3% compared to 10.3% in April. This was a result of Central Bank's devaluation of the Egyptian pound by 13% and increasing interest rate. Moreover, the core inflation also increased to 12.23% in May compared to 9.51% in April.

GCC countries are launching 17 million jobs for expat workers as well as providing more job opportunities for women as a way to fight poverty. The countries also plan to join UN 2030 program to decrease poverty. GCC recorded that around 80 BN USD is sent from GCC by non-citizen workers to their home counties.

According to Byblos Bank's Real Estate Demand Index, demand for properties in Lebanon has decreased by more than 12% in Q1-2016 compared to Q4-2015. The reasons behind the drop in demand are the war in Syria, the political uncertainties, and the economic slowdown. It is also worth mentioning that most of the foreign direct investments in Lebanon were related to real estate sector.

The World Bank forecasted that the UAE and the rest of GCC region will continue to experience economic pressure due to the drop in oil prices as well as tightened fiscal and monetary policies. The World Bank forecasted that the UAE growth in 2016 will be 2% compared to last year's GDP of 3.4%.

The Central Bank of Morocco announces that it is aiming to introduce a flexible exchange rate system instead of the current fixed exchange rate system early 2017. In a previous attempt to offer greater flexibility, the Central Bank of Morocco decreased the euro's weight in the currency basket to 60 % from 80%, and increased the weight of the dollar to 40% from 20%.

Addressing members of the World Trade Organization in Geneva, the UAE announced that it is working on a new foreign investment law that will allow full or partial ownership of foreign investments in sectors that enhance economic diversification.

Saudi Arabia is planning to loosen the mechanism of issuing visas to investors by reducing the country's visa requirements in order to attract more investors and foreign capital and to diversify the economy.

The Omani government sold 2.5 BN USD of bonds in an attempt to finance its budget deficit that resulted from the drop in oil prices. This was the first issuance for Oman in the international debt market since 1997.

Political Events

The United Nations removed the blacklisting of a Saudi-led coalition for killing children in Yemen, as a result of a pressure by Saudi Arabia threatening to cut Palestinian aid and funds to other UN programs.

A fake security threat forced EgyptAir passenger plane from Cairo to Beijing to make an emergency landing in Uzbekistan. Consequent to the landing, the plane was evacuated and all passengers and crew were searched.

In Qatar, as a result of the visit of the Indian Prime Minister Narendra Modi and in the occasion of the Holy month Ramadan, the government of Qatar has released 23 Indian prisoners.

Stock Market

.QSI telecommunication sector witnessed a significant increase led by Vodafone Qatar and banking sector led by Qatar National Bank (QNB) and Qatar Islamic Bank (QIB).

.ADI real estate sector increased led by Aldar Properties and telecommunication sector led by Etisalat. Moreover, banking sector increased led by National Bank of Abu Dhabi (NBAD) and Abu Dhabi Commercial Bank (ADCB).

Companies Transactions

Egyptian Takaful Property and Liability Insurance (EGTAK) won a policy bid worth 30.1 MM USD for South Cairo and Giza Mills and Bakeries. The policy aims to provide securities against risks of fire and burglary to the company's assets and properties machines.

CIB Egypt will not sell CI Capital - its investment bank - to Beltone. The plan was dropped due to failure in attaining the necessary regulatory approvals.

Faisal Islamic Bank in Egypt released a rise in turnovers to 6.5 MM USD by the end of May 2016. On the other hand, the bank's assets have increased by 4.2% amounting to 56.89 BN EGP.

Bahrain's Gulf Air cut their annual losses by 62% in 2015 to reach 63 MM USD. As a plan for boosting their global footprint by 50% or more, the airline has ordered a fleet of new aircraft orders. The government invested 7.6 BN USD to order 45 Boeing and Airbus aircraft to be delivered in Q2-2018.

The Lebanese Central Bank approved the sale of EFG Hermes 40% stake of Credit Libanais to a group of Lebanese, Arab, and international investors including sophisticated funds, institutional and individual investors, for over 310 MM USD.

In light of the proposed merger of Oman's Bank Sohar and Bank Dhofar, the two banks have agreed on a share swap ratio of 1:1.29, whereas every share of Dhofar bank will be swapped for 1.29 share of bank Sohar.

IBM has signed a ten-year technology services agreement with Emirates Airlines worth 300 MM USD to provide the company with IT infrastructure and increase the efficiency in its passengers support systems and functions,

Dubai Investments, partnering with Al Mal Capital, announced its plans to launch two funds worth 1 BN AED each targeting the healthcare and education sectors. The fund focusing on the healthcare sector will be launched in October, and the second fund targeting assets in the education sector will be launched 6 months later. Both funds are planned to provide a cash yield of around 8%.

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